Raising rates cuts income inequality

Much of President Barack Obama's second-term agenda revolves around narrowing the massive and growing gap between rich and poor. The centerpiece of this plan is an increase in the minimum wage to $9 an hour by 2015, after which it would be indexed to inflation.

There's little reason to think that the GOP-led House will go along with this, but it's the right thing to do.

Congress has failed to keep the minimum wage at a reasonable level. At $7.25 since 2009, it would need to be $10.59 to match its purchasing power in 1968. Indexing the wage to inflation would end these periodic games with the most vulnerable Americans as political footballs. And it would provide more certainty to businesses about their costs, which is presumably why Mitt Romney endorsed it during the campaign.

The need is real. The federal government classified 10.5 million Americans as "working poor," including 4.1 million full-time workers. Their ranks have been swollen by an economy that's funneled 98 percent of all income gains to the top 10 percent of earners since 1980, according to the Economic Policy Institute.

Opponents say the wage increase will be counterproductive because employers will reduce the number of jobs overall. But the evidence is mixed at best. It's also logical that when low-wage workers have enough money for food and rent and a little extra to spend, businesses will hire more people to meet the demand.

Recently the University of Chicago's IGM Forum released a survey of about 40 top economists from across the political spectrum. On the question of whether raising the minimum wage would make it "noticeably harder for low-skilled workers to find employment," the economists were divided: 34 percent said it would, 32 percent said it wouldn't, and the rest were uncertain.

But they were then asked if the benefits of Obama's proposal outweighed its drawbacks, making the policy "desirable." Fully 47 percent said they agreed it was desirable. Only 11 percent said they disagreed, with the rest uncertain or having no opinion.

Opposing an increase in today's minimum wage really means, let's face it, opposing any minimum wage. But conservatives who hold that view offer no policy alternative to reduce inequality. Their answer is that if the free market is allowed to work its magic, the wealth will trickle down. It doesn't take a survey of top economists to see how laughable that is.

Our consumer economy can't survive with fewer and fewer people able to buy things. It's time to increase the federal minimum wage.